Obama Calls Income Gap 'Wrong' — After Widening It

Obamanomics: The president has been decrying the growing gap between rich and poor in the U.S. to help sell his retread tax-and-spend proposals. But those policies have already produced record levels of income inequality.

In his speech in Illinois last week, and at events since, Obama described income inequality in the starkest terms. "This growing inequality is morally wrong," he said, and "undermines the very essence of America."

To be sure, income inequality is a standard trope for liberals, who always use it to advocate more wealth redistribution.

And Obama's latest focus neatly coincides with his plans to push for more federal spending and taxes on the "rich" in coming budget battles.

But what Obama conveniently leaves out of his sermons is that income inequality has grown faster on his watch than any time in the past two decades, at least.

Research by University of California economist Emmanuel Saez shows that since the Obama recovery started in June 2009, the average income of the top 1% grew 11.2% in real terms through 2011.

The bottom 99%, in contrast, saw their incomes shrink by 0.4%.

As a result, 121% of the gains in real income during Obama's recovery have gone to the top 1%. By comparison, the top 1% captured 65% of income gains during the Bush expansion of 2002-07, and 45% of the gains under Clinton's expansion in the 1990s.

The Census Bureau's official measure of income inequality — called the Gini index — shows similar results. During the Bush years, the index was flat overall — finishing in 2008 exactly where it started in 2001.

It's gone up each year since Obama has been president and now stands at all-time highs.

It's worth underscoring that the growing income gap under Obama isn't the result of the rich getting fabulously richer. Nor is it any sort of indictment of "trickle down" economics.

Instead, it is the direct result of Obama's historically weak economic recovery, which has left the rest of the country falling behind while the wealthy have managed to make gains.

Census data show, for example, that the poorest 20% of families saw their real average income continue to fall each year from 2009 to 2011 — the last year for which the Census has data — while the top 20% recouped losses suffered in the recession.

The evidence of decline among the nation's most vulnerable shows up elsewhere. There are 2.7 million more people in poverty than there were in 2009. And 14 million more are on food stamps today than in 2009. And after four years of economic recovery, there are still 4.3 million long-term unemployed.

Meanwhile, researchers have found that high-paying jobs lost during the recession are being replaced, if at all, largely by low-paying jobs in the Obama recovery.

All this is in stark contrast to previous economic recoveries, which generally saw at least some income gains across the Census Bureau's income groupings.

Despite this record, Obama's answer is simply to increase the dose of the very same treatments — more government spending, more taxes, more intrusions into the marketplace in the name of "shared prosperity" — that hobbled the recovery and produced the very misery he now claims he can fix.

In other words, Obama is selling snake oil. And that's what's morally wrong.

See Also

Politics: The White House has denounced an anti-abortion group's videos of Planned Parenthood's activities as "fraudulent" and circled its wagons to defend the indefensible. What kind of White House is this?For an institution that might argue that it doesn't have a dog in this fight, the White ...

Iran Deal: After initially refusing, the United Nations' International Atomic Energy Agency will brief senators Wednesday. Are its nuclear monitoring practices kept secret because they're inadequate?Yukiya Amano, the director general of the IAEA, until Friday was refusing to brief senators on ...

Corruption: The third installment of released emails fell hard Friday on the Hillary Clinton campaign. If her candidacy lasts until the end of the summer, there's much more wrong with this country than we thought.Friday had to be an extraordinarily trying day for the Democratic front-runner. On the ...

Regulation: As businesses struggle to stay open and lay off workers, the Environmental Protection Agency is preparing one of the biggest hiring binges in America outside of Google. Good news? Hardly.Barack Obama's EPA has announced it will try to hire 800 new regulators over the next several ...

Taxes Vs. Prosperity: The Real Wedge Issue Ronald Reagan died 11 years ago, and his presidency ended a quarter century ago. But my, how his tax-cutting ideas live on. The living legacy of Reaganomics, or supply-side economics, is that tax rates keep falling all over the world. Imitation really is ...

About Investor's Business Daily

Investor’s Business Daily provides exclusive stock lists, investing data, stock market research, education and the latest financial and business news to help investors make more money in the stock market. All of IBD’s products and features are based on the CAN SLIM® Investing System developed by IBD’s Founder William J. O’Neil, who identified the seven common characteristics that winning stocks display before making huge price gains. Each letter of CAN SLIM represents one of those traits.

Select market data is provided by Interactive Data Corp. Real Time Services. Price and Volume data is delayed 20 minutes unless otherwise noted, is believed accurate but is not warranted or guaranteed by Interactive Data Corp. Real Time Services and is subject to Interactive Data Corp. Real Time Services terms. All times are Eastern United States. *Reflects real-time index prices.